Every COP host puts its stamp on the proceedings. For Brazil, which kicked off the 30th “Conference of Parties” global climate talks this week, the focus is on nature, and tropical forests in particular.
The South American country, home to the largest expanse of the Amazon, has centered a fund to protect tropical forests at the heart of the COP30 agenda. The Tropical Forests Forever Facility, or TFFF, would pay heavily forested nations — including Brazil itself — to prevent deforestation.
The Amazon has been called the planet’s “lungs” for its ability to absorb and store carbon from the atmosphere. Rampant deforestation and wildfires threaten the Amazon’s ability to act as a carbon sink and imperil its rich biodiversity and the livelihoods of its inhabitants.
Under Brazilian President Luiz Inácio Lula da Silva, deforestation rates have slowed. But forests around the world are still being rapidly deforested to make way for palm oil plantations, cattle and timber harvesting.
Global finance directed to forests totaled about $84 billion in 2023, while the annual investment required to meet 2030 forest-goals is nearly $300 billion, according to the United Nations Environment Program.
Not only is there a gap in financing for conservation, but a large amount of finance continues to reinforce the activities driving global deforestation. More than $400 billion per year in public subsidies continue to flow into industries that threaten forests, such as extractive agriculture, mining and infrastructure among them. And banks are still funding those sectors as well.
Changing this dynamic requires developing forest finance markets that are mature and scaled enough to attract institutional capital.
Most funding for forest protection still comes from public sources, channeled through smaller, short-term projects. What’s lacking is the scalable investment opportunities that have boosted other green industries such as clean energy – mainly because of lack of involvement from the private sector. In 2023, private finance accounted for only $7.5 billion, or 9%, of total forest related funding.
Blended finance
Brazil’s tropical forest fund is trying a new approach.
Brazil is looking to raise $125 billion via a blended-finance structure combining public, philanthropic and private capital. About $25 billion would come from governments and foundations as anchor capital, absorbing early-stage risk; that concessional layer would unlock roughly $100 billion from private investors via bond issuances.
The pooled funds would be invested in a diversified portfolio of fixed income emerging markets and other sovereign and corporate bonds. Those returns would be paid out annually to forest-rich nations that meet conservation targets — primarily by keeping annual deforestation below 0.5% of total forest area. Countries that succeed would receive about $4 per hectare of standing forest.
Brazil became the first country to make any financial commitment at New York Climate Week last month — pledging $1 billion. Other countries have been slower to step up, and Brazil has downsized its fundraising expectations to $10 billion by next year.
The TFFF structure prioritizes repaying private investors and sponsor countries before disbursing forest payments. Supporters argue this market-linked design is necessary to attract institutional capital that would otherwise remain on the sidelines. Critics warn it could subordinate conservation outcomes to financial performance.
“A $125 billion fund will use profits from global markets to invest in forest protection. Can we trust the same financiers driving deforestation to save the world’s forests?” says the nonprofit Global Witness.
At least 20% of the disbursements will go directly to Indigenous peoples and local communities, who collectively manage or inhabit more than one-third of the world’s remaining tropical forests. That allocation would represent one of the largest global financial flows ever directed to these communities.
If it reaches this $125 billion target, the TFFF would be the largest blended mechanism of its kind. The fund could generate up to $4 billion annually in conservation payments, while providing investors with steady returns. Private investors including PIMCO, Bank of America and Barclays have signaled they would support the fund.
“There are some opportunities of investments for forestry that I think are going to be really very innovative” COP30’s president André Aranha Corrêa do Lago told ImpactAlpha “The private sector will have in Belem, I hope, a completely different approach of what is investing in climate positive.”
Who’s stepping up
Since the initial announcement, China, Norway, France, Germany, Singapore and the United Arab Emirates have expressed interest in contributing.
The United Kingdom, which participated in the facility’s design process, has announced that it would not invest quite yet, citing domestic fiscal constraints.
The World Bank was named as custodian earlier this week, while technical design has been supported by the World Resources Institute and the Woodwell Climate Research Center and Stanford Institute for Economic Policy Research. The World Bank also hosts the loss and damage fund agreed upon at COP27 in Glasgow. Up to 74 developing countries with tropical and subtropical forests could eventually qualify for support, pending final eligibility criteria and governance structures to be unveiled at COP30.
